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When you sell a 3 family investment property and have a

When you sell a...

When you sell a 3 family investment property and have a remaining loan to pay off from the proceeds is the capital gain based on after paying the loan or before let me give you an example first hold on

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Original purchase price 97500 sales price 268000 closing costs ( does this include the sales commission) 9775 mortgage payoff 140000 depreciation 45500

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Answered in 7 minutes by:
2/28/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,383
Experience: Taxes, Immigration, Labor Relations
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When the loan was taken to purchase or refinance the property - that amount was NOT included into gross income for tax purposes - correct?

That was because of realistic expectation the loan woudl be repaid.

So when eventually the loan balance is paid back - that repayment will be deducted and will NOT affect calculation of taxable gain.

The basis for calculating the gain or loss is the original purchase price $97500

That basis is adjusted

MINUS depreciation 45500

PLUS - any improvement expenses

PLUS sale expenses - the sales commission, closing fees, etc.

.

Do not include mortgage balance repayment, real estate taxes, mortgage interest.

.

The gain is calculated as

268000 (sale price) MINUS (adjusted basis)

You will need to use form 4797 to report the sale translation.

Let me know if you need any help.

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Customer reply replied 5 months ago
THAT HELPS OUT THANK YOU
SO MY PURCHASE PRICE WAS 97800
my improvements where 42500
my depreciation 43449
i figured my gain was around 153k
can you confirm this calculation for the gain?

The basis for calculating the gain or loss is the original purchase price $97500

That basis is adjusted

MINUS depreciation 43449

PLUS - any improvement expenses 42500

PLUS sale expenses - the sales commission, closing fees, etc.

= $96551

.

The gain is calculated as

268000 (sale price) MINUS 96551(adjusted basis) = $171449

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Customer reply replied 5 months ago
TY

I appreciate if you take a moment to rate the answer.

Experts are ONLY credited when answers are rated positively.

If you still have any doubts, need clarification - please be sure to ask.

I am here to help you with all Social Security / Tax related issues.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,383
Experience: Taxes, Immigration, Labor Relations
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